Will Facebook (FB) Outshine Youtube (GOOG) In Online Video Ads

Facebook Inc (NASDAQ: FB) | Google Inc Class C (NASDAQ: GOOG)

Facebook has been making a big attempt to control online video ads; a space that Google currently dominates. As a result, there has been a ton of discussion around the topic. The big question is “Which company will take the place as the leader in the industry; and for good reason. Video ads are worth about ten times as much money as standard text ads. While there is a bit of a debate, I honestly think that the answer is cut and dry. Today, we’ll chat a bit about Facebook and the stab they’ve taken at Google’s Youtube, as well as why I think that while Facebook will see success in the space, Google is going to maintain the crown. So, let’s get right to it…

Facebook’s And Online Video

The first thing I should touch on here is the fact that there have been several internet based companies that claim to be working on taking an edge of the online video advertising business. However, Facebook is one of the very few that is actually walking the talk and putting it’s money where it’s mouth is. Throughout the past several months, we’ve heard a few big pieces of news that show that Facebook is working hard to take the spot as top video ad producer…

  • Talking To Content Creators – Video ads are nothing if there’s not strong video content for consumers to watch after viewing the ads; and FB knows this! So, they have recently been reaching out to some of the best online video creators with special offers and incentives to get them to start creating videos for Facebook.
  • Revenue Share – In a big stomp on Google’s toes, Facebook recently announced that they will be sharing revenue from online video ads with their top content producers. Their plan here bears a bit of similarity to Google’s Youtube. Both companies take a 45% cut of advertising income. However, there is a major difference between the two. On Youtube, anyone with a pipe dream and a video camera can upload video in hopes of striking it rich. However, on Facebook, only specific content creators will be paid their cut of video ads.
  • Interactive Mobile Video Ads – Facebook has also recently announced that they are in the process of creating and testing interactive mobile video ads. Considering the value of standard video ads, I would imagine that interactive ads would prove to be even more profitable.

Why Google Will Hold The Crown

While there is no doubt that Facebook is working hard to de-throne Google as the king of online video ads, I don’t think it’s going to work. There are a few reasons for this…

  • Audience – First off, both of these companies have an incredibly large audience. However, their audiences are very different. While Facebook’s audience goes to the platform to socialize and happens to come across a video from here to there, Google’s audience goes to YouTube knowing that they are going to be watching online video and searching for the videos they want; which is far more valuable to advertisers.
  • Rev-Share – As I mentioned above, Facebook’s revenue share program may look very similar to Google’s on the outside, but when you look at the details, they are very different. The bottom line is that since anyone can earn revenue on Youtube, Google is likely to keep the new artists rolling in while Facebook is going to have a problem there.
  • Video Audience – Finally, the video watchers are very important. Google’s YouTube streams around 4 billion videos per day. If you’ve done your research, that’s the exact same number that Facebook boasts. However, when you look into the details, it’s easy to see that Google’s stats are stronger. You see, Facebook shows videos in a stream that automatically play on mute mode. If the user lets the moving picture continue playing for 3 seconds, it counts as a video view. So, while Facebook may have 4 billion videos viewed per day, the audience at YouTube is far more attentive; making the platform more attractive to advertisers.

What Do You Think?

Which company do you think will be the long term king of online video ads, let us know in the comments below!

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1 thought on “Will Facebook (FB) Outshine Youtube (GOOG) In Online Video Ads”

  1. In the long run I think Google will have the upper hand in video ads, like you pointed out, unless facebook starts to give great video content worthy of watching a long video ads, Google will have the upper hand since it’s already there. Also I think Google’s strategy is stronger because it doesn’t attempt to cherry pick content creators as you said. Facebook can’t know what’s the next best thing in video content and Google doesn’t even try. It’s often that geek with a camera and serious dedication that randomly becomes the next big thing. I’m sure Facebook may do decent cherry picking but I think unless they open the floodgates like Youtube they’ll always be behind.

    I might be biased because I never really liked Facebook.


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